DCIT CEN CIR 7(3), MUMBAI vs. GALAXY PREMISES P.LTD, MUMBAI

Per Joginder Singh (Judicial Member) This bunch of the six appeals is by the Revenue

against the impugned orders all dated 16/09/2016 of the

Ld. First Appellate Authority, Mumbai, deleting the penalty

imposed under section 271E and 271D of the Income Tax

Act, 1961 (hereinafter the Act), on the ground that the

genuineness of the transactions were not established by

the assessee.

Patankar, defended the penalty imposed by the Ld.

Assessing Officer by contending that the Ld. Commissioner

of Income Tax (Appeal) ignored the factual matrix, while

deleting the penalties, that the assessee did not establish

the genuineness of the transaction. On the other hand, the

ld. counsel for the assessee, Shri Vijay Mehta, defended the

impugned order by claiming that the impugned issue is

covered by the decision from Hon'ble Delhi High Court in

the case of Commissioner of Income-tax v. Noida Toll

Bridge Co. Ltd. 262 ITR 260 (Del.) and also from

jurisdictional High Court in the case of CIT vs Ajinath Hi-

ITA Nos.7124 to 7129/Mum/2016 3 M/s Galaxy Premises Pvt. Ltd. Tech Builders Pvt. Ltd. (ITA NO.171 of 2015) and Lodha

Crown Buildmart Pvt. Ltd./Lodha Builders Pvt. Ltd. (ITA

NO.202 of 2015 and 213 of 2015), order dated

06/02/2018. It was also pleaded that the issue in hand is

also covered by the decision of the Tribunal in the case of

Vimal Enterprises vs JCIT (ITA NO.6390/Mum/2016),

order dated 14/06/2017. In reply, the Ld. CIT-DR, relied

upon the decision from Hon'ble Bombay High Court in CIT

vs Triumph International Finance (I) Ltd. (2012) 22

taxmann.com 138 (Bom.).

2.1. We have considered the rival submissions and

perused the material available on record. The facts, in brief,

are that the assessee is engaged in the business of

construction and land development. A search and seizure

action under section 132 of the Act was carried out upon

Lodha Group on 10/01/2011, wherein, undisclosed

transactions were found and as a result about 200 crores

was disclosed by the group. Such disclosure was made on

account of undisclosed receipt on account of sale of car

parking in the housing projects, cash loans/deposits, etc.

As per the Revenue, the assessee violated the provisions of

ITA Nos.7124 to 7129/Mum/2016 4 M/s Galaxy Premises Pvt. Ltd. section 269SS of the Act. A show cause notice was issued

to the assessee as to why penalty under section 271D

should not be levied. The assessee filed its submissions

vide letter dated 13/07/2015, which has been reproduced

in the penalty order. The Ld. Assessing Officer place

reliance upon various decisions and initiated penalty

proceedings under section 271D/271E of the Act.

Penalties were imposed as has been mentioned in the

respective penalty order.

2.2. On appeal before the Ld. Commissioner of

Income Tax (Appeal), the impugned penalties were deleted

against which the Revenue is in appeal before this

Tribunal.

2.3. Before adverting further, now we shall analyze

certain case laws, which were relied upon by both sides.

The Ld. CIT-DR place reliance upon the decision in

Triumph International Finance India Ltd., order dated,

12/06/2012 (2012) 22 taxmann.com 138 (Bom), wherein,

the Hon'ble jurisdictional High Court observed/held as

under:-

ITA Nos.7124 to 7129/Mum/2016 5 M/s Galaxy Premises Pvt. Ltd. “This appeal was admitted on 13th September 2010 on the following substantial question of law :- "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that transactions effected through journal entries in the books of the assessee would not amount to repayment of any loan or deposit otherwise than by account payee cheque or account payee bank draft within the meaning of Section 269T to attract levy of penalty under Section 271E of the Income Tax Act, 1961 ?" 2. The assessment year involved herein is AY 2003-04. 3. The respondent-assessee, a Public Limited Company, is a member of the National Stock Exchange and is also a Category I Merchant Banker, registered with the Securities and Exchange Board of India (SEBI). The assessee is engaged in the business of shares, stock broking, investment and trading in shares and securities. 4. In the assessment year in question, the assessee had filed its return of income declaring loss of Rs. 17,27,21,815/-. The assessment was completed on 5th November 2003 under Section 143(3) of the Income Tax Act, 1961 ('Act' for short) determining loss at Rs. 9,84,92,500/-. 5. Prior to 1st April 2002, the assessee had accepted a sum of Rs. 4,29,04,722/- as and by way of loan/inter-corporate deposit from the Investment Trust of India which was repayable during the assessment year 2003-2004. During the previous year relevant to the assessment year in question, the assessee on 3rd October 2002 had transferred 1,99,300 shares of Rashal Agrotech Limited held by it to the Investment Trust of India for an aggregate consideration of Rs. 4,28,99,325/-. Thus, in the assessment year in question, the assessee was liable to repay the loan/inter-corporate deposit amounting to Rs. 4,29,04,722/- to the Investment Trust of India and receive Rs. 4,28,99,325/- from Investment Trust of India towards sale price of the shares of Rashal Agrotech Limited sold by the assessee to the Investment Trust of India. Instead of repaying the loan/inter-corporate deposit to the Investment Trust of India and receiving the sale price of the shares from the Investment Trust of India, both the parties agreed that the amount payable/receivable be set-off in the respective books of account by making journal entries and pay the balance by account payee cheque. Accordingly, after setting off of the mutual claim through journal entries, the balance amount of Rs. 5,397/- due and payable by the assessee to the Investment Trust of India was paid by a crossed cheque dated 19th February 2003 drawn on the Citibank. 6. In view of the objections raised in the Audit Report regarding repayment of loan/inter-corporate deposit otherwise than by an account payee cheque or draft, the assessing officer issued a show-cause notice calling upon the assessee to show cause as to why action should not be taken against the assessee for violating the provisions of Section 269T of the Act. The assessee opposed the show-cause notice by filing a detailed reply. However, by an order dated 21st March 2006 passed under Section 271E of the Act, the assessing officer on the basis of the

ITA Nos.7124 to 7129/Mum/2016 6 M/s Galaxy Premises Pvt. Ltd. report of the Joint Parliamentary Committee of Lok Sabha and Rajya Sabha on the Stock Market Scam imposed penalty amounting to Rs. 4,28,99,325/- on the ground that the assessee had repaid the loan/inter- corporate deposit to the extent of Rs. 4,28,99,325/- in contravention of the provisions of Section 269T of the Act. 7. On appeal filed by the assessee, the Commissioner of Income Tax (Appeals) by his order dated 21st December 2006 confirmed the penalty levied upon the assessee. On further appeal filed by the assessee, the Tribunal by the impugned order dated 29th January 2008 allowed the appeal by following its decision in the case of V N Parekh Securities Private Limited and Ketan V Parekh and held that the payment through journal entries do not fall within the ambit of Section 269SS or 269T of the Act and consequently no penalty can be levied either under Section 271D or Section 271E of the Act. Challenging the aforesaid order, the Revenue has filed the present appeal. 8. Mr. Suresh Kumar, learned counsel appearing for the Revenue submitted that the assessee belongs to the Ketan Parekh Group, which is involved in the securities scam. He submitted that the Ketan Parekh Group was found to be indulging in large scale manipulation of prices of select scripts through fraudulent use of bank and other public funds and had flouted all the norms of risk management by making transactions through a large number of entities so as to hide the nexus between the sources of funds and their ultimate use with the sole motive of evading tax. He submitted that since the language of Section 269T of the Act is clear and unambiguous, the Tribunal ought to have held that repayment of the loan/inter-corporate deposit otherwise than by account payee cheque or demand draft was in violation of the provisions of Section 269T of the Act and, hence, the penalty imposed under Section 271E of the Act was justified. 9. Mr. Pardiwala, learned Senior Advocate appearing on behalf of the respondent - assessee, on the other hand submitted that Section 269T of the Act has been enacted to curb the menace of giving false explanation of the unaccounted money found during the course of search and seizure. He submitted that the bona fide transaction of repayment of loan or deposit by way of adjustment through book entries carried out in the ordinary course of business would not come within the mischief of the provisions of Section 269T of the Act. Referring to the legislative history as also the circulars issued by the Central Board of Direct Taxes from time-to-time, Mr.Pardiwala submitted that Sections 269SS and 269T were not meant to hit the genuine transactions and the legislative intent is to mitigate any unintended hardships caused by the provisions to genuine transactions. He submitted that in the present case genuineness of the transactions entered into by the assessee with the Investment Trust of India is not in doubt. No additions on account of the impugned transactions have been made in the regular assessment made under Section 143(3) of the Act. He submitted that Section 269T postulates that if a loan or deposit is repaid by an outflow of funds, same has to be by an account payee cheque or demand draft. He submitted that discharge of the debt in the nature of loan or deposit in a

ITA Nos.7124 to 7129/Mum/2016 7 M/s Galaxy Premises Pvt. Ltd. manner otherwise than by an outflow of funds would not be hit by the provisions of Section 269T. 10. Mr. Pardiwala further submitted that in the present case Rs. 4,29,04,722/- was due and payable by the assessee to the Investment Trust of India and the assessee was liable to receive a sum of Rs. 4,28,99,325/- from the Investment Trust of India. Instead of repaying the amount by account payee cheque/demand draft and receiving back the amount by way of demand draft/cheque, the parties as and by way of commercial prudence have settled the account by netting off the accounts and paid the balance by account payee cheque. Relying on a decision of the Apex Court in the case of J.B. Boda & Co. (P.) Ltd. v. CBDT [1997] 223 ITR 271 /[1996] 89 Taxman 311, counsel for the assessee submitted that the two-way traffic of forwarding bank draft and receiving back more or less same amount by way of bank draft was unnecessary and, therefore, in the facts of the present case, no fault could be found with the repayment of loan through journal entries. 11. Mr. Pardiwala submitted that Section 269T, if plainly read, supports the contention of the Revenue that each and every loan or deposit has to be repaid only by an account payee cheque or draft. However, such literal interpretation, if accepted, would lead to absurdity because, by such interpretation not only mala fide transactions but even the genuine transactions would be affected. Relying on the judgments of the Apex Court in the case of Asstt. Director of Inspection (Investigation) v. Kum. 258 / 122 574 and CIT v. J.H. A.B. Shanthi [2002] 255 ITR Taxman Gotla [1985] 156 ITR 323 /23 Taxman 14J (SC) counsel for the assessee submitted that if a strict and literal construction of a statute leads to an absurd result, that is, a result not intended to be sub-served by the object of the legislation ascertained from the scheme of the legislation and if another construction is possible apart from the strict and literal construction, then, that construction should be preferred to strict literal construction. 12. Referring to the provisions contained in the Code of Civil Procedure and books on accountancy, counsel for the assessee submitted that set off of the claim/counter-claim otherwise than by account-payee cheque or bank draft are legally permissible in commercial transactions as also in the accounting practice. Therefore, it must be held that genuine transactions like the transaction in the present case involving repayment of loan through journal entries do not violate Section 269T of the Act. In any event, it is contended that having regard to the commercial dealings between the parties it must be held that there was reasonable cause for repaying the loan through journal entries and in view of Section 273B of the Act penalty was not imposable under Section 271E of the Act. In support of the above contention, reliance was placed on the decision of the Delhi high Court in the case of CIT v. Noida Toll Bridge Co. Ltd. [2003] 262 ITR 260/[2004] 139 Taxman 115 , decision of the Gujarat High Court in the case of CIT v. Shree Ambica Flour Mills Corpn. [2008] 6 DTR 169 and a decision of this Court in the case

ITA Nos.7124 to 7129/Mum/2016 8 M/s Galaxy Premises Pvt. Ltd. of CIT v. Motta Constructions (P.) Ltd. [2011] 338 ITR 66 /[2012] 20 taxmann.com 574. 13. We have carefully considered the rival submissions. 14. The basic question to be considered in this appeal is, whether repayment of loan of Rs. 4,28,99,325/- by making journal entries in the books of account maintained by the assessee is in contravention of Section 269T of the Act, and, if so, for failure to comply with the provisions of Section 269T, the assessee is liable for penalty under Section 271E of the Act. 15. Section 269T, Section 271E and Section 273B of the Act, to the extent relevant for the present case relating to AY 2003-2004 read thus :- "Mode of repayment of certain loans or deposits. 269T.- No branch of a banking company or a co-operative bank and no other company or co-operative society and no firm or other person shall repay any loan or deposit made with it otherwise than by an account payee cheque or account payee bank draft drawn in the name of the person who has made the loan or deposit if - (a) the amount of the loan or deposit together with the interest, if any, payable thereon, or (b) the aggregate amount of the loans or deposits held by such person with the branch of the banking company or cooperative bank or, as the case may be, the other company or co-operative society or the firm, or other person either in his own name or jointly with any other person on the date of such repayment together with the interest, if any, payable on such loans or deposits, is twenty thousand rupees or more : Provided that where the repayment is by a branch of a banking company or co-operative bank, such repayment may also be made by crediting the amount of such loan or deposit to the savings bank account or the current account (if any) with such branch of the person to whom such loan or deposit has to be repaid : Provided further … Explanation. - For the purposes of this section, - (i) … (ii) … (iii) "loan or deposit" means any loan or deposit of money which is repayable after notice or repayable after a period and, in the case of a person other than a company, includes loan or deposit of any nature." ** ** ** "Penalty for failure to comply with the provisions of Section 269T

ITA Nos.7124 to 7129/Mum/2016 9 M/s Galaxy Premises Pvt. Ltd. 271E.- (1) If a person repays any loan or deposit referred to in Section 269T otherwise than in accordance with the provisions of that section, he shall be liable to pay, by way of penalty, a sum equal to the amount of the loan or deposit so repaid. (2) Any penalty imposable under sub-section (1) shall be imposed by the Joint Commissioner." ** ** ** "Penalty not to be imposed in certain cases. 273B.- Notwithstanding anything contained in the provisions of clause (b) of sub-section (1) of section 271, section 271A, section 271AA, section 271B, section 271BA, section 271BB, section 271C, section 271D, section 271E, section 271F, section 271G, clause (c) or clause (d) of sub-section (1) or sub-section (2) of section 272A, sub-section (1) of section 272AA or section 272B or sub-section (1) of section 272BB or sub-section (1) of section 272BBB or clause (b) of sub-section (1) or clause (b) or clause (c) of sub-section (2) of section 273, no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the said provisions if he proves that there was reasonable clause for the said failure." 16. Chapter XXB containing Sections 269SS to Section 269TT were introduced by the Income Tax (Second Amendment) Act 1981 with effect from 11th July 1981 with a view to counter the evasion of tax. The object of the provisions contained in Chapter XXB of the Act as explained by the CBDT in its circular No.345 dated 28th June 1982 is that the proliferation of black money poses a serious threat to the national economy and to counter that major economic evil, Chapter XXB has been introduced. 17. Section 269T in Chapter XXB of the Act, as introduced originally in the year 1981 provides that none of the entities specified therein (which includes a Company like the assessee) shall repay any deposit made with it otherwise than by an account payee cheque/bank draft drawn in the name of the person who had made the deposit, if the amount of the deposit together with the interest, if any, payable thereon, exceeds the amount specified therein. The obligation to repay the deposit by account payee cheque/bank draft for the entities specified in Section 269T would have to be construed as mandatory in view of the negative language used in the Section. Section 269T provides that none of the entities specified therein shall repay deposit otherwise than by the modes set out therein. In other words, the Section provides that irrespective of the fact that there are several modes for repaying the deposit, the entities specified in Section 269T shall repay the deposit only by the modes set out therein. The mandatory requirement of Section 269T is further fortified by Section 276E inserted along with Section 269T on 11th July 1981 which provides that if a person referred to in Section 269T of the Act repays any deposit in contravention of Section 269T then such person shall be punishable with imprisonment for a period upto two years and also liable to fine equal to the amount of

ITA Nos.7124 to 7129/Mum/2016 10 M/s Galaxy Premises Pvt. Ltd. deposit. Thus, the negative language used in Section 269T as also the penal consequences provided in Section 276E for non-compliance of the procedure prescribed under Section 269T leave no manner of doubt that repayment of deposit in the manner prescribed under Section 269T is mandatory. 18. With effect from 1st April 1989, Section 276E dealing with the consequences on failure to comply with Section 269T has been omitted and Section 271E has been inserted which provides penalty for failure to comply with Section 269T of the Act. Section 269T has been substituted by Finance Act 2002 with effect from 1st June 2002 wherein the provision relating to repayment of deposit exceeding the prescribed limit by account payee cheque/draft has been extended to repayment of loans as well. Thus, with effect from 1st June 2002, it is mandatory under Section 269T of the Act for the persons specified therein to repay any loan/deposit together with interest, if any, exceeding the limits prescribed therein, by account payee cheque/bank draft and failure to do so is made liable for penalty under Section 271E of the Act. 19. In the present case, it is not in dispute that the assessee has repaid loan/deposit by debiting the account through journal entries. The question is, whether such repayment of loan/deposit is in contravention of the modes of repayment set out in Section 269T ? The argument advanced by the counsel for the assessee that the bonafide transaction of repayment of loan/deposit by way of adjustment through book entries carried out in the ordinary course of business would not come within the mischief of Section 269T cannot be accepted, because, the section does not make any distinction between the bonafide and non-bonafide transactions and requires the entities specified therein not to make repayment of any loan/deposit together with the interest, if any otherwise than by an account payee cheque/bank draft if the amount of loan/deposit with interest if any exceeds the limits prescribed therein. Similarly, the argument that only in cases where any loan or deposit is repaid by an outflow of funds, Section 269T provides for repayment by an account payee cheque/draft cannot be accepted because Section 269T neither refers to the repayment of loan/deposit by outflow of funds nor refers any of other permissible modes of repayment of loan/deposit, but merely puts an embargo on repayment of loan/deposit except by the modes specified therein. Therefore, in the present case, where loan/deposit has been repaid by debiting the account through journal entries, it must be held that the assessee has contravened the provisions of Section 269T of the Act. 20. Strong reliance was placed by the counsel for the assessee on the decision of the Apex Court in the case of J.B. Boda & Co. (P.) Ltd. ( supra). In that case, J.B. Boda & Co. (P.) Ltd. (supra) carrying on business as reinsurance brokers were during the course of business required to remit the entire reinsurance premium payable to the foreign reinsurers in foreign currency and then receive commission in foreign currency from the said foreign insure Rs. Instead of remitting the entire amount to the foreign reinsurers and then receiving commission from the said foreign insurers, J B Boda & Company with the approval of the

ITA Nos.7124 to 7129/Mum/2016 11 M/s Galaxy Premises Pvt. Ltd. Reserve Bank of India retained the foreign currency to the extent of the commission and remitted the balance amount to the foreign reinsure Rs. As deduction under Section 80-O of the Act in respect of the amount retained as commission was denied by the income tax authorities as also the High Court, the Company approached the Apex Court and the Apex Court held that to insist on a formal remittance to the foreign reinsurers first and thereafter to receive the commission from the foreign reinsurer would be an empty formality and a meaningless ritual on the facts of that case. Accordingly, the Apex Court held that the Company was entitled to 80-O deduction in respect of the commission retained by the Company. In our opinion, the aforesaid decision of the Apex Court has no relevance to the facts of the present case, because, Section 80-O and Section 269T operate in completely different fields. The object of Section 80-O is to encourage Indian Companies to develop technical knowhow and make it available to foreign companies and foreign enterprises so as to augment the foreign exchange earnings, where as, the object of Section 269T in Chapter XXB of the Act is to counteract evasion of tax. For Section 80-O, receiving income in convertible foreign exchange is the basic requirement, where as, for Section 269T, compliance of the conditions set out therein is the basic requirement. Section 80-O does not prescribe any particular mode for receiving the convertible foreign exchange, where as, Section 269T bars repayment of loan or deposit by any mode other than the mode stipulated under that Section and for contravention of Section 269T penalty is imposable under Section 271E of the Act. In these circumstances, the decision of the Apex Court rendered in the context of Section 80-O cannot be applied while interpreting the provisions of Section 269T of the Act. 21. It is relevant to note that with a view to mitigate the hardship that may be caused to the genuine business transactions on account of the bar imposed under Section 269T and the penalty imposable under Section 271E, the legislature, by the Taxation Laws (Amendment & Miscellaneous Provisions) Act 1986 has introduced Section 273B with effect from 10th September 1986. Section 273B interalia provides that notwithstanding anything contained in Section 271E, no penalty shall be imposed on the person or the assessee as the case may be for any failure referred to in the said Section, if such person or assessee proves that there was reasonable cause for such failure. Thus, reading Section 269T, 271E and 273B together it becomes clear that : (a) Under Section 269T it is mandatory for the persons specified therein to repay loan/deposit only by account payee cheque/draft if the amount of loan/deposit together with interest, if any, exceeds the limits prescribed therein; (b) Non-compliance of the provisions of Section 269T renders the person liable for penalty under Section 271E; and (c) Section 273B provides that no penalty under Section 271E shall be imposed if reasonable cause is shown by the concerned person for failure to comply with the provisions of Section 269T of the Act.

ITA Nos.7124 to 7129/Mum/2016 12 M/s Galaxy Premises Pvt. Ltd. 22. The argument advanced on behalf of the assessee that if Section 269T is construed literally, it would lead to absurdity cannot be accepted, because, repayment of loan/deposit by account payee cheque/bank draft is the most common mode of repaying the loan/deposit and making such common method as mandatory does not lead to any absurdity. No doubt, that in some cases genuine business constraints may necessitate repayment of loan/deposit by a mode other than the mode prescribed under Section 269T. To cater to the needs of such exigencies, the legislature has enacted Section 273B which provides that no penalty under Section 271E shall be imposed for contravention of Section 269T if reasonable cause for such contravention is shown. 23. The expression 'reasonable cause' used in Section 273B is not defined under the Act. Unlike the expression 'sufficient cause' used in Section 249(3), 253(5) and 260A(2A) of the Act, the legislature has used the expression 'reasonable cause' in Section 273B of the Act. A cause which is reasonable may not be a sufficient cause. Thus, the expression 'reasonable cause' would have wider connotation than the expression 'sufficient cause'. Therefore, the expression 'reasonable cause' in Section 273B for non-imposition of penalty under Section 271E would have to be construed liberally depending upon the facts of each case. 24. In the present case, the cause shown by the assessee for repayment of the loan/deposit otherwise than by account-payee cheque/bank draft was on account of the fact that the assessee was liable to receive amount towards the sale price of the shares sold by the assessee to the person from whom loan/deposit was received by the assessee. It would have been an empty formality to repay the loan/deposit amount by account-payee cheque/draft and receive back almost the same amount towards the sale price of the shares. Neither the genuineness of the receipt of loan/deposit nor the transaction of repayment of loan by way of adjustment through book entries carried out in the ordinary course of business has been doubted in the regular assessment. There is nothing on record to suggest that the amounts advanced by Investment Trust of India to the assessee represented the unaccounted money of the Investment Trust of India or the assessee. The fact that the assessee company belongs to the Ketan Parekh Group which is involved in the securities scam cannot be a ground for sustaining penalty imposed under Section 271E of the Act if reasonable cause is shown by the assessee for failing to comply with the provisions of Section 269T. It is not in dispute that settling the claims by making journal entries in the respective books is also one of the recognized modes of repaying loan/deposit. Therefore, in the facts of the present case, in our opinion, though the assessee has violated the provisions of Section 269T, the assessee has shown reasonable cause and, therefore, the decision of the Tribunal to delete the penalty imposed under Section 271E of the Act deserves acceptance. 25. In the result, we hold that the Tribunal was not justified in holding that repayment of loan/deposit through journal entries did not violate

ITA Nos.7124 to 7129/Mum/2016 13 M/s Galaxy Premises Pvt. Ltd. the provisions of Section 269T of the Act. However, in the absence of any finding recorded in the assessment order or in the penalty order to the effect that the repayment of loan/deposit was not a bonafide transaction and was made with a view to evade tax, we hold that the cause shown by the assessee was a reasonable cause and, therefore, in view of Section 273B of the Act, no penalty under Section 271E could be imposed for contravening the provisions of Section 269T of the Act. 26. The appeal is disposed of in the above terms with no order as to costs.” 2.3. Another decision relied upon by Ld. CIT-DR is

from Bombay Tribunal in the case of Lodha Builders Pvt.

Ltd. & Ors. vs ACIT (ITA No.475 to 481/Mum/2014, etc),

order dated 27/06/2014, wherein, on identical issue, the

appeals of the assessee were allowed. The aforesaid order

dated 27/06/2014 of the Tribunal is reproduced

hereunder:-

“There are 7 appeals under consideration involving seven different assessees. These are the sister concerns belonging to Lodha Group. All these appeals are filed by the assessees involving AY 2009-2010 against the common order of the CIT (A)- 38, Mumbai, dated 31.12.2013 involving penalty u/s 271D of the Act. Levy of penalty u/s 271D/E of the Income Tax Act is the issue in these appeals and the CIT (A) passed separate orders, dated same involving penalty u/s 271E. Since, the issues raised by the assessees in all the seven appeals are identical. Therefore, for the sake of convenience, they are clubbed, heard combinedly and disposed of in this consolidated order. Appeal wise and ground wise adjudication is given in the following paragraphs. To start with, we shall undertake to adjudicate the appeal in the case of Lodha Builders Pvt Ltd in the succeeding paragraphs involving two penalties u/s 271D & 271E of the Act . 2. This appeal ITA No.476/M/2014 filed by the assessee on 21.1.2014 is in connection with penalty levied u/s 271D of the Act and the effective grounds raised in the appeal read as under:

ITA Nos.7124 to 7129/Mum/2016 14 M/s Galaxy Premises Pvt. Ltd. "1. On the facts and in the circumstances of the case and in law, the Ld CIT (A) erred in upholding the order passed by the Addl. CIT under section 271D of the Act on the basis that the appellant had violated the provisions of section 269SS of the Act and also argued that there was no reasonable cause for such alleged contravention. 2. On the facts and in the circumstances of the case and in law, the CIT (A) erred in upholding the penalty imposed under section 271D of the Act without appreciating the fact that the appellant had not accepted any loan or deposit of money more so in contravention of the provisions of section 269SS of the Act. 3. On the facts and in the circumstances of the case and in law, the CIT (A) erred in upholding the penalty imposed under section 271D of the Act without appreciating the fact that the transactions of assigning or transferring rights / receivables and liabilities amongst the group companies by passing journal entries does not tantamount to taking or accepting of loan or deposit of money and it is not in contravention of section 269SS of the Act. Hence, the impugned penalty levied under section 271D of the Act ought to be deleted. The Ld CIT (A) ought to have held that the making of journal entries in the books of the respective parties for the impugned purpose is also one f the recognized modes of assigning or transferring the rights / receivables / liabilities in relation to genuine business transactions and it does not result in a contravention of section 269SS of the Act and in any event, the adjustment of accounts by passing such entries would tantamount to sufficient cause as contemplated by section 273B of the Act. 4. On the facts and in the circumstances of the case and in law, the Ld CIT (A) erred in upholding the penalty levied under section 271D of the Act without appreciating the fact that the transactions entered into amongst the group companies were genuine, bona fide and entered into on account of commercial exigency and were neither intended nor resulted in any tax evasion or concealment of income. The curbing of which was the avowed object behind the introduction of section 269SS of the Act. 5. Without prejudice to above grounds, on the facts and in the circumstances of the case and in law, the Ld CIT (A) erred in not deleting the penalty levied under section 271D of the Act by applying the provisions of section 273B and also not appreciating the detailed explanations, clarification and documents submitted by the appellant in support of the impugned genuine and bona fide business transactions, the rationale and commercial exigency for effectuating such transactions and the existence of reasonable cause for making journal entries for assigning or transferring the rights / receivables and liabilities amongst the group companies.... "

ITA Nos.7124 to 7129/Mum/2016 15 M/s Galaxy Premises Pvt. Ltd. 2.1 In another appeal ITA No.481/M/2014 involving the penalty u/s 271E, the assessee raised identical grounds. 3. During the proceedings before us, assessee filed an additional ground on 23.4.2014 identical to all the appeals and the same reads as under: "On the facts and in the circumstances of the case and in law, the Ld CIT (A) erred in holding that the penalty order passed by the Addl. CIT is within the limitation date. The impugned penalty order is time barred under section 275(1)(c) of the Act and hence, the said order is liable to be quashed." 4. Briefly stated relevant facts of the case are that the assessee who belongs to the Lodha group of cases, is engaged in the business of land development and construction of real estate properties. Assessee filed the return of income declaring the total income at Rs. NIL and the same was subsequently revised to adjust carry forward losses. Assessment was completed determining the total income of Rs. 26,69,084/- under the special provisions of section 115JB of the Act. In the scrutiny assessment, there is a solitary and minor addition made by the AO u/s 14A of the Act. There is no further appeal against the said order of the AO before the CIT (A). Thus, the assessment reached finality. In the assessment, vide para 6, the AO, otherwise, mentioned about "Accepting / repayment of loans other than account payee cheques / draft". Eventually, AO mentioned that such accepting / repayment of loans other than account payee cheques / drafts (through journal entries) amounts to violation of the provisions of section 269SS and 269T of the Act. Subsequently, for imposing the penalty proceedings, AO made a reference to the Addl. CIT for necessary action. The contents of para 6 is extracted as under: "Accepting / Repayment of loans other than account payee cheques / draft: 6. During the course of assessment proceedings it is noticed that assesee has accepted / repaid loans from various sister concerns through Journal Entry other than account payee cheque / draft. The assessee was asked why the loans were accepted / repaid other than by account payee cheque / draft. In response to this, asessee informed that these loans / transactions are made with the sister concerns only and there is no cash transaction involved. The contention of the assessee is not acceptable as the assesse is not falling under these exempt categorically, where loan or deposit can be accepted / repaid other than by account payee cheques /draft. Hence, by not accepting the loan / deposit by account payee cheque / draft, the assessee has violated the

ITA Nos.7124 to 7129/Mum/2016 16 M/s Galaxy Premises Pvt. Ltd. provisions of section 269SS and 269T of the IT Act. Regarding initiation of penalty proceedings u/s 271D & 271E of the IT Act, the matter is being referred to Addl. CIT, CR-6, Mumbai for necessary action."

Lodha Builders Pvt Ltd AY 2009-2010 Name of the lender JV through Amt Accepted thro’ JV Abhinandan Lodha Lodha Developers Rs. 16,06,564/- Lodha Properties Development Rs. 37,38,000/- P Ltd Abhishekh Lodha Lodha Hi-Rise Builders Pvt Ltd Rs. 19,08,000/- Lodha Properties Development Rs. 8,00,000/- Lodha Developers Rs. 1,99,54,541/- Ananthnath Contrn & farm P Lodha Hi-rise Rs. 1,20,06,768/- Ltd Arihant Premises Dharmanath Infra & Agro Rs. 51,45,000/- Lodha Developers Rs. 40,000/- Balaji Hitech Macrotech construction Pvt Ltd Rs. 3,00,00,000/- Durgeshwari Hi-rise Lodha Hi-rise Builders Pvt Ltd Rs.2,22,51,23,478/- Farms Pvt Ltd Macrotech Constructions Rs. 1,20,50,00,000/- Gajanand Buildtech Vamadevi Developers & Farms Rs. 78,462/- & Agro Pvt Ltd PLtd Ganeshji realty and Agro P M.P. Lodha Rs. 1,00,000/- Ltd Lodha Buildcon Pvt Lodha Hi-Rise Builders Pvt Ltd Rs. 36,52,594/- Ltd Lodha Designer Lodha Developers Ltd Rs.1,78,13,002/- construction Pvt Ltd Lodha Developers Dharmnath Infra & Agro Pvt Rs. 25,350/- Ltd Lodha Impression Real Estate Rs. 4,00,00,000/-

ITA Nos.7124 to 7129/Mum/2016 17 M/s Galaxy Premises Pvt. Ltd. P Ltd Hi-class Buildcon Pvt Ltd Rs. 5,00,00,000/- Arihant Premises Rs. 35,95,401/- Marutinandan Real Estate Rs. 9,30,50,000/- Hi-class Buildcon Pvt Ltd Rs. 3,00,000/- Maa Padmavati Township Pvt Rs. 20,19,76,661/- Ltd Macrotech Constructions Pvt Rs. 17,60,752/- ltd Adinath Builders Rs. 38,95,868/- Lodha Estate Pvt Ltd Lodha Dwellers Rs. 2,59,47,923/- Lodha Hi rise Arihand Premises Rs. 17,20,00,000/- Ajitnath Hi Tech Builders Rs. 1,00,000/- Lodha Healthy Construction Rs. 33,30,00,000/- Parasnath Hi tech Rs. 1,75,00,000/- Kidga Vyukdcib Rs, 72,11,828/- Lodha Crown Buildmart Pvt Ltd Rs. 64,95,133/- Shri Sainath Enterprise Rs. 35,00,000/- Gandhar Builders Pvt ltd Rs. 14,50,000/- Lodha Land Abhinandan Lodha Rs. 30,000/- Developers M.P. Lodha Rs. 40,000/- Macro Tech Constrtn P Vivek Enterprise Rs. 1,64,26,354/- Ltd Lodha Hi rise Rs. 10,01,176/- Sidheswar Realestate p Vamadevi developers Rs. 63,982/- ltd Vamadevi Macrotech Constructions Rs. 1,44,804/- Developers Gajanand Buildtech Shree Gajanand Builders Pvt Rs. 2,81,739/- Ltd Maa Padmavati Software & Rs. 3,34,325/- Infocon Gandhar Buildrs Pvt Lodha Hi Rise Buildres Pvt Ltd Rs. 3,06,06,238/- Ltd Shantinath Designer Lodha Hi rise Builders Pvt Ltd Rs. 15,00,000/- Construction Pvt Ltd Lodha Impression Arihant Premises P Ltd Rs. 4,00,00,000/- Real Estate Pvt Ltd Lodha Developers Pvt Ltd Rs. 14,00,000/- Hi class buldcon Pvt Arihant Premises Pvt Ltd Rs. 5,00,00,000/- ltd Lodha Developers Ltd Rs. 15,65,000/- Naminath Builders & Lodha Developers Ltd Rs. 11,00,000 Farms Pvt Ltd Grand total Rs. 495,23,61,634/-

ITA Nos.7124 to 7129/Mum/2016 18 M/s Galaxy Premises Pvt. Ltd. 15.2.2012. There was a change of incumbent and therefore, a fresh notice was issued on 21.8.2012. Assesseee replied to both the notices and submitted written submissions at many occasions. Some of the contents and submissions are reproduced in para 7 of the penalty order dated 28.9.2012. Briefly stated, the submissions of the assessee include that the loans received are by way of „journal entries‟ and there is no acceptance of cash by any method other than the one prescribed in the statute. The core transactions were undertaken by way of cheque only and however, the assessee resorted to the journal entries for transfer / assignment of loan among the group companies for business consideration. In case of journal entries, as per the assessee, the liabilities are transferred / assigned by the group companies to the assessee or to take effect of actionable claims / payments / received by group companies on behalf of the company. The journal entries were also passed in the books of accounts for reimbursement of expenses and for sharing of the expenses within the group. In such cases, the provisions of section 269SS of the Act have no application and for this, the assesse relied on the judgment of the Hon‟ble Madras High Court in the case of CIT vs. Idhayam Publications Ltd [2007] 163 Taxman 265 (Mad.) which is relevant for the proposition that the deposit and the withdrawal of the money from the current account could not be considered as a loan or advance. It is the contention of the assessee that there is no cash transactions involved and relied on the contents of the CBDT Circular No.387, dated 6th July, 1984 and mentioned that the purpose of introducing section 269SS of the Act is to curb cash transactions only and the same is not aimed at transfer of money by transfer / assignment of loans of other group companies. In this regard, Ld Counsel cited various decisions mentioned in para 7.4 of the impugned order. It is the submission of the assessee that the said provisions of section 269SS of the Act do not apply to "journal entries". To substantiate the reasonable cause as to why journal entries were resorted to, the assessee made the following submissions. "7.5.1. Journal entries are passed to avoid delay in procedural hassles of preparing cheque and obtaining signature of authorized person which may cost delay or to arrange temporary fund to effect such transactions. The assessee company did not have internet facility so that intercompany balance can be settled through bank account. Hence, there was a business exigency to clear transactions by passing journal entries. 7.5.2. All journal entries are genuine / bona fide and at no point of time there are remotely any cash transactions with group companies. 7.5.3. All journal entries are with group / associate companies only having permanent account number and are filing their income tax returns regularly. 7.5.4. There is no revenue loss to the exchequer.

ITA Nos.7124 to 7129/Mum/2016 19 M/s Galaxy Premises Pvt. Ltd. 7.5.5. All the transactions are recoreded in the account of the assessee and there are corresponding entries in the books of account of the respective parties which satisfied the test of business exigency. 7.5.6. The AR further submitted during the period when journal entries were passed, the assessee company was under the bona fide belief that there is no breach of provisions of income tax Act considering recognized method of assigning credit / debit balance by passing journal entries and various decisions cited above. In this context, he referred to section 273B of the Act. He also relied on the decision of Bombay High Court in case of Triumph International Finance India Limited dated 12th June, 2012 reported in 22 taxmann.com 138 to submit that in the absence of any finding recorded in the assessment order or in the penalty order to the effect that the repayment of loan / deposit was not a bona fide transaction and was made with a view to evade tax the cause shown by the assessee was a reasonable cause and, therefore, in view of section 273B of the Act, no penalty under section 271E could be imposed for contravening the provisions of section 269T of the Act." 7. On considering the above submissions of the assessee, Addl. CIT examined the provisions of section 269SS/T of the Act, as the case may be, and discussed certain judgments including the binding judgment of the Hon‟ble Bombay High Court in the case of Triumph International (I) Ltd, dated 12th June, 2012 reported in 22 taxmann.com 138. Further, he reproduced the contents of the said judgment of the Hon‟ble High Court (supra) which is relevant for the proposition that where the loan / deposit were repaid by debiting the amount through journal entries, it must be held that the assessee has contravened the relevant provisions. Though the said judgment was delivered in the context of provisions of section 269T of the Act, the same was equally adopted for the provisions of section 269SS of the Act. Addl. CIT discussed on the irrelevance of the genuineness of the transactions in these matters of impugned penalty proceedings. He also examined the aspects of the bona fide and genuineness of the transactions before concluding that the assessee failed to establish the genuineness of transactions carried out. Addl. CIT further mentioned that even bona fide and genuineness of the transactions, if carried out in violation of provisions of section 269SS of the Act, the same would attract the provisions of section 271D of the Act. There was a discussion on the applicability of the decision of the Tribunal in the case of Mahak Sing vs. ITO (ITAT, Del) 127 ITD 1 relating to the mens rea issues. Eventually, the Addl. CIT levied the penalty of Rs. 495,23,61,634/- u/s 269SS of the Act within the meaning of section 271D of the Act. Further, depending on the nature of credit, journal entries are summarized into 6 categories, namely (i) assignment of debit balance to a group company (4.75 Crs); (ii) lender assigns debt to group company (Rs. 93.47 Crs); (iii) assigning of group debt to an independent company (Rs. 374.92 Crs); (iv) Directors / family

ITA Nos.7124 to 7129/Mum/2016 20 M/s Galaxy Premises Pvt. Ltd. account transfers (Rs. 2.81 Crs); (v) payment / receipt on behalf of group company (Rs. 19.19 Crs) and (vi) miscellaneous (Rs. 0.10 Crs). Addl CIT passed similar penalty order u/s 271D in respect of other group concerns namely M/s. Lodha Properties Development Pvt Ltd (Rs. 30,11,30,396/-); M/s. Adhinath Builders Pvt Ltd (Rs. 32,81,39,868/-); M/s. Ajitnath Hi-tech Builders Pvt Ltd (Rs. 81,75,244/- ); M/s. Aasthavinaya Real Estate Pvt Ltd (Rs. 61,50,900/- ); M/s. Ajitnath Hi-tech Builders Pvt Ltd and M/s. Infratech Builders and Agro Pvt Ltd (Rs. 36,67,81,854/-). Aggrieved with the same, assessee filed an appeal before the CIT (A). Before the CIT(A): 8. During the first appellate proceedings, CIT (A)-38, Mumbai passed a combined order on 31.12.2013 confirming the penalties levied by the Addl. CIT in all the above referred cases. It is the conclusion of the CIT (A) that the assessee failed to establish the reasonable cause as required u/s 273B of the Act. Concluding para of the said CIT (A)‟s order reads as under: "9.37. Considering all the above facts, it is clear that the appellant failed to establish "reasonable cause" as required u/s 273B of the Act accordingly, the penalties levied amounting to Rs. 495,23,61,634/-; Rs. 39,11,30,396/-; Rs. 32,81,39,868/-; Rs. 61,50,900/-; Rs. 81,75,244/- and Rs. 36,67,81,854/- in the cases of M/s. Lodha Builders Pvt Ltd., M/s. Lodha Properties Development Pvt Ltd., M/s. Adinath Builders Pvt Ltd., M/s. Aasthavinaya Real Estate Pvt Ltd., M/s. Ajitnath Hi-tech Builders Pvt Ltd and M/s. Infratech Buildes and Agro Pvt Ltd respectively are hereby confirmed." 9. During the proceedings before the first appellate authority, assessee filed written submissions common to all appeals of the group. Referring to the judgment of the Hon‟ble High Court in the case of Triumph International (I) Ltd (supra), assessee submitted that the commercial expediency of the group concerns is held to be acceptable reason for squiring up/swapping of the transactions by passing the journal entries and therefore, it constitutes a „reasonable cause‟ in the instant case too. For this, assessee relied on the judgment in the case of Sun Engineering works Pvt Ltd 198 ITR 297 and others. It is the case of the assessee that the Hon‟ble High Court of Bombay eventually deleted the penalty on the ground of „reasonable cause‟ and therefore, on appreciating the „principles of commercial expediency‟ here in this case, the AO/ Addl. CIT should not have imposed the penalty. CIT (A) extracted the written submissions on the „reasonable cause‟ vide the letters dated 15.4.2013 and 3.5.2013. Further, on these submissions, CIT (A) called for remand report of the AO vide letter dated 10.5.2013 and considered the remand report of the Addl. CIT dated 31.10.2013 before confirming the penalty.

ITA Nos.7124 to 7129/Mum/2016 21 M/s Galaxy Premises Pvt. Ltd. Further, CIT (A) discussed the factual matrix of the transactions involved among the group concerns in the light of the provisions of section 269SS as well as 271D of the Act. Para 9 of the impugned order contains the decision of the CIT (A), wherein, he dealt with the remand report, provisions of section 46A of the IT Rules, 1962. CIT (A) is of the opinion that the journal entries constitute contravention of provisions of section 269SS of the Act and therefore, such contravention attracts the provisions of section 271D of the Act. He relied heavily on the judgment of the jurisdictional High Court in the case of Triumph International (I) Ltd (supra). The contents of para 9.4 to 9.9 of the CIT (A)‟s order are relevant here. Further, CIT (A) held that genuineness of the transactions is no excuse for avoiding the provisions of these sections. Relevant paras of the said judgment of Bombay High Court were extracted in para 9.13 of the impugned order. Assessee detailed the reasonable cause for each of the transactions as evident from para 9.16 of the impugned order. However, the same were not considered as reasonable causes by the CIT (A). CIT (A) referred to the judgment of the Hon‟ble Rajasthan High Court in the case of Madhan Lal Mahaveer Prasad (296 ITR 377) to support his case. In any case, this is not the case where the journal entries were held as contravention to the provisions of section 269SS of the Act. As seen from para 9.26, the CIT (A) mentioned that there was a limited journal entries in the case of M/s. Triumph International Finance (I) Ltd (supra) and the reasons of swapping between the debtors and creditors by passing journal entry was seen as reasonable cause by the High Court. CIT (A) discussed various decisions of the Tribunal but most of them do not involve the fact of involving the journal entries unlike the present case and also in the case of M/s. Triumph International Finance (I) Ltd (supra). Eventually, CIT (A) confirmed the penalties as mentioned above. 10. On Limitation of Time: During the proceedings before the CIT (A), there was also an issue relating to „limitation‟ u/s 275 of the Act. It is the submission of the assessee that the present orders being penalty in nature, which are unconnected with the assessment of income which are covered by the clause (a) of section 275(1) of the Act, the provisions of clause (c) of section 275(1) of the Act are relevant. Considering the date of initiation of the penalty proceedings during the very assessment itself (assessment dated 5.12.2011) (para 6 extracted above), the penalty order passed by the Addl. CIT on 28.9.2012 is barred by limitation of time. Assessee relied on the judgment of the Rajasthan High Court in the case of Jitendra Singh Rathore [352 ITR 327] (Raj). However, CIT (A) did not considered the said judgment of the Hon‟ble High Court. Instead, he relied on the decision of ITAT, Chandigarh Special Bench in the case of Dewan Chand Amit Lal [283 ITR (AT) 203]. In the said judgment, the Special Bench held that the „limitation‟ does not commence from the date of the show cause notice issued by the Assessing Officer as Joint

ITA Nos.7124 to 7129/Mum/2016 22 M/s Galaxy Premises Pvt. Ltd. Commissioner is the empowered to impose the penalty. CIT (A) discussed the ratio of the said Rajasthan High Court judgment in the case of Jitendra Singh Rathore (supra) and extracted its conclusion that the period of limitation should be reckoned from the date of issue of notice from the AO and not from the date of issue of show cause notice by the Joint Commissioner. Without analyzing the distinguished features of the said judgment of the Rajasthan High Court, substantially, the CIT (A) followed the said Special Bench decision (supra). CIT (A) is of the opinion that the Special Bench decision of the Tribunal has more binding effect than that of the non- jurisdictional High Court judgment. Para 9.34 and 9.35 of the CIT (A)‟s order are relevant here. Essentially, for dismissing the assessee‟s legal issue on the limitation of time, CIT (A) relied on the said order of the Special Bench in the case of Dewan Chand Amit Lal (supra) and held that the penalty proceedings are not barred by the limitation of time as the show cause notice issued by the Addl. CIT dated 15.2.2012 and the due date after considering the extended time u/s 129 of the Act is 30.9.2012. Since, the Addl. CIT passed order on 28.9.2012, the impugned orders of the penalty are valid. Accordingly, the CIT(A) dismissed the legal issue. In any case, it is not the case of the CIT (A) that the provisions of section 275(1)(a) of the Act apply to the facts of the present case. Aggrieved with the above conclusions on both the legal as well as on merits, the assessee is in appeal before the Tribunal in all the cases under consideration. Before the ITAT: 11. During the proceedings before us, Shri P.J. Pardiwala Ld Counsel for the assessee pickup the facts and developments relating to the case of M/s. Lodha Builders Pvt Ltd. To start with, Ld Counsel brought out attention to the additional ground and demonstrated its legal nature and prayed for its admission. On hearing both the parties, we find that the said ground detailed in para 3 of this order is legal in nature and therefore, the same is admitted. This ground raises various issues and they are required to be addressed by the Tribunal apart from the issues relating to the merits of penalty.

ITA Nos.7124 to 7129/Mum/2016 23 M/s Galaxy Premises Pvt. Ltd.

S Entity name Date of Order Date of Penal Date of End of Six Six Limitation Extenti Extend Date of FY in N AO order passe ref. to ty u/s Penalty Months months for levy of on of ed penalty which o d by ADIT SCN by from end from the penalty limitati limitati order proceedi JC of month end of on u/s on ngs are in which months 275(2) initiated penalty in which Exp was penalty (i)r.w. initiated was 129 (Asst. initiated Order) (SCN) 1 Lodha 5.12.11 ACIT 11.1.12 271E 15.2.12 31.3.12 30.6.12 31.8.12 31.8.12 30 30.9.12 28.9.12 Builders Pvt Ltd 2 Lodha 5.12.11 ACIT 11.1.12 271D 15.2.12 31.3.12 30.6.12 31.8.12 31.8.12 30 30.9.12 28.9.12 Builders Pvt Ltd 3 Ashtavinayak 25.11.11 ACIT 11.1.12 271D 15.2.12 31.3.12 30.5.12 31.8.12 31.8.12 30 30.9.12 28.9.12 Real Estate Pvt Ltd 4 Adinath 15.12.11 ACIT 11.1.12 271D 15.2.12 31.3.12 30.6.12 31.8.12 31.8.12 30 30.9.12 28.9.12 Builders Pvt Ltd 5 Ajinath Hi- 5.12.11 ACIT 11.1.12 271D 15.2.12 31.3.12 30.6.12 31.8.12 31.8.12 30 30.9.12 28.9.12 Tech Builders Pvt Ltd 6 Infratech 25.11.11 ACIT 11.1.12 271D 15.2.12 31.3.12 30.5.12 31.8.12 31.8.12 30 30.9.12 28.9.12 Builders and agro Pvt Ltd 7 Lodha 7.12.11 ACIT 11.1.12 271D 15.2.12 31.3.12 30.6.12 31.8.12 31.8.12 30 30.9.12 28.9.12 Properties Development Pvt Ltd

ITA Nos.7124 to 7129/Mum/2016 24 M/s Galaxy Premises Pvt. Ltd. 14. Referring to the facts of the present case, Ld Counsel mentioned that the said „action‟ has begun with the first show cause notice issued by the AO in the assessment proceedings (para 6 of the assessment order). Accordingly, the AO has heard the assessee at length on this issue of violation of the provisions of section 269SS and 269T, as the case may be, and the assessee vehemently contested the AO‟s proposals in the matter. Rejecting the assessee‟s explanation, AO formed an opinion in the matter against the assessee and eventually, AO made a referral to the Addl CIT, who is the authority empowered to impose the penalty under the statute. Ld Counsel submitted that the provisions of relevant sections of the Act do not provide on who is empowered to initiate such penalty proceedings. However, it only provides for who is empowered to impose penalty. In this regard, Ld Counsel relied on various decisions to strengthen his legal proposition. Further, he mentioned that the show cause notice first issued by the Assessing Officer is valid in such matters and filed copies of judgments of the Hon‟ble High Courts of Delhi and Rajasthan. He also mentioned that the Special Bench decision in the case of Dewan Chand Amit Lal (supra) is not a binding judgment considering the existence of judgments of various High Courts i.e., CIT vs. Hissaria Bros [2007] 291 ITR 244 (Raj) which upheld the order of the Tribunal, wherein the penalty show cause notice, which was issued by the AO, is found valid for the purpose of computing the time limitation u/s 275(1)(c) of the Act. It is also mentioned that the judgment of the Hon‟ble Rajasthan High Court in the case of Hissaria Bros (supra) was subsequently followed by the same High Court in the case of CIT vs. Jitendra Singh Rathore [2013] 352 ITR 327 (Raj). It is the contention of the assessee that an identical decision was taken by the Delhi High Court in the case of Noida Toll Bridge Co. Ltd (supra). It is the contention of the assessee that in the instant case, assessment orders were passed on Nov / Dec. 2011 and therefore, the penalty would be time barred in May / June, 2012, as the case may be, whereas the penalty orders passed by the Addl. CIT on 28.9.2012. Referring to the contention of the CIT (A), who held that Special Bench decision in the case of Dewan Chand Amit Lal (supra) has a precedent over the non-jurisdictional High Court judgment, the Ld Counsel mentioned that prima facie, the said propositions are erroneous and consequently, the judgments from any hon‟ble High Court has more precedent value over a Special Bench decision of the Tribunal. 15. Per contra, on this legal issue, it is the contention of Ld Sri Girija Dayal, CIT- DR that the impugned penalty orders of the AO and the CIT(A) need to be confirmed. Accordingly to him the provisions of clause (a) to section 275(1) apply to the present case and in that case, the orders are very much valid legally as there is no expiry of limitation of time. Further, he mentioned that the time limitation commences from the date of issue of show cause notice by the Addl.

ITA Nos.7124 to 7129/Mum/2016 25 M/s Galaxy Premises Pvt. Ltd. CIT, who has an authority to impose the penalty and not from the date of the SC notice of the AO or his order of the assessment, which contains the proposal to make a reference to the Addl. CIT for imposing the penalty. If the provisions of clause (a) are applied and the date of show cause notice issued by the Addl. CIT is considered, the penalty orders dated 28.9.2012 are very much in time and therefore, they are valid. However, in such case, Ld DR could not demonstrate the circumstances where the provisions of clause (c) of section 275(1) of the Act, can be invoked. It is thus summed up by the assessee‟s counsel that if the penalty matters are covered by the provisions of clause (a) of the said section, the provisions of clause (c) become redundant and vestigial.

Legal Issue -Limitation of time - Finding of the Tribunal 16. We have heard both the parties on the legal issues raised in the Additional Ground i.e., applicability of the provisions of clause (c) to section 275(1) of the Act to the impugned penalties and the manner of computing the limitation of time provided in the said clause. To decide the above issues, in our opinion, the provisions of section 275 of the Act are required to analysed. The same read as under: "275(1)[(a) in a case where the relevant assessment or other order is the subject-matter of an appeal to the Commissioner (Appeals) under section 246 [or section 246A] or an appeal to the Appellate Tribunal under section 253, after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed or six months from the end of the month in which the order of the Commissioner (Appeals) or, as the case may be, the Appellate Tribunal is received by the Chief Commissioner or Commissioner, whichever period expires later : [Provided that in a case where the relevant assessment or other order is the subject-matter of an appeal to the Commissioner (Appeals) under section 246 or section 246A, and the Commissioner (Appeals) passes the order on or after the 1st day of June, 2003 disposing of such appeal, an order imposing penalty shall be passed before the expiry of the financial year in which the proceedings, in the course of which action for imposition of penalty has been initiated, are completed, or within one year from the end of the financial year in which the order of the Commissioner (Appeals) is received by the Chief Commissioner or Commissioner, whichever is later;] (b) ......... (c) in any other case, after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed, or six months from the end

ITA Nos.7124 to 7129/Mum/2016 26 M/s Galaxy Premises Pvt. Ltd. of the month in which action for imposition of penalty is initiated, whichever period expires later."

"21. By substituting section 275(1), which became operative from 1-4- 1989, the provision of divided cases for the purpose of prescribing limitation for completing penalty proceedings into three categories : (i)Category I covers cases where the assessment to which the proceedings for imposition of penalty relate is the subject-matter of an appeal to the Dy. CIT(A) or the CIT(A) under section 246 or with effect from 1-6-2000, section 246A or an appeal to the Tribunal under section 253; (ii)Category II covers cases where the relevant assessment is the subject-matter of revision under section 263; and (iii)Category III covers all other cases not falling within category I and category II which is governed by clause (c). By dividing into three categories the period of limitation for cases falling under category (i), i.e., clause (1)(a) is the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed or six months from the end of the month in which the order of the Dy. CIT(A) or the CIT(A) or, as the case may be, the Tribunal is received by the Chief CIT or CIT, whichever period expires later. 22. The period of limitation for the cases falling under category II is six months from the end of the month in which such order on revision is passed and the period of limitation for the cases falling under the above category III is the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed, or six months from the end of the month in which action for imposition of penalty is initiated, whichever period expires later. In the last category, filing of appeal in respect of order passed in proceedings during which penalty proceedings were initiated is not relevant.

ITA Nos.7124 to 7129/Mum/2016 27 M/s Galaxy Premises Pvt. Ltd. To this effect, a Circular No. 551, dated 23-1-1990 [(1990) 82 CTR (St.) 325] and another Circular No. 554, dated 13-2-1990 [(1990) 82 CTR (St.) 280] were issued by the CBDT.

ITA Nos.7124 to 7129/Mum/2016 28 M/s Galaxy Premises Pvt. Ltd. In such cases, the penalty proceedings can be initiated independent of any proceedings but obviously, the penalty proceedings can be initiated only when the default is brought to the notice of the concerned authority which may be during the course of any proceedings and, therefore, for this type of cases where the penalty proceedings have been initiated in connection with the defaults for which no statutory mandate is there about any particular proceedings during the course of which only such penalty proceedings can be initiated, a different period of limitation has been prescribed under clause (c) as a separate category. In cases falling under clause (c), penalty proceedings are to be completed within six months from the end of the month in which the proceedings during which the action for imposition of penalty is initiated, are completed, or six months from the end of the month in which action for imposition of penalty is initiated, whichever period expires later. There is no provision under clause (c) for the extended period of limitation commensurating with completion of the appellate proceedings, if any, arising from the proceedings during the course of which such penalty proceedings are initiated as in the case where the penalty proceedings are linked with the assessment proceedings or the other relevant proceedings.

ITA Nos.7124 to 7129/Mum/2016 29 M/s Galaxy Premises Pvt. Ltd. making payment through cheque or demand draft where it is so required to be made. Either of the contingencies does not affect the computation of taxable income and levy of correct tax on chargeable income; if clause (a) was to be invoked, no necessity of clause (c) would arise."

ITA Nos.7124 to 7129/Mum/2016 30 M/s Galaxy Premises Pvt. Ltd. case of CIT vs. Worldwide Township Projects Ltd vide ITA No.232/2014, where Honble Delhi High Court explained the above said provisions in the context of penalty levied u/s 271D of the Act. Para 8 of the said judgment of the High Court is relevant here and the same reads as under:

"8. A plain reading of the aforesaid section indicates that (the import of the above provisions is limited) it applies to a transaction where a deposit or a loan is accepted by an assessee, otherwise than by an account payee cheque or an account payee draft. The ambit of the section is clearly restricted to transaction involving acceptance of money and not intended to affect cases where a debt or a liability arises on account of book entries. The object of the section is to prevent transactions in currency. This is also clearly explicit from clause (iii) of the explanation to section 269SS of the Act which defines loan or deposit to mean "loan or deposit of money". The liability recorded in the books of accounts by way of journal entries, i.e., crediting the account of a party to whom monies are payable or debiting the account of a party from whom monies are receivable in the books of accounts, is clearly outside the ambit of the provision of section 269SS of the Act, because pasing such entries does not involve acceptance of any loan or deposit of money. In the present case, admittedly no money was transacted other than through banking channels M/s. PACL India Ltd made certain payments through banking channels to land owners. This payment made on behalf of the assessee was recorded by the assessee in its books by crediting the account of M/s. PACL India Ltd. In view of this admitted position, no infringement ofsection 269SS of the Act is made out. This court, in the case of Noida Toll Bridge Co. Ltd (supra), considered a similar case where a company had paid money to the Government of Delhi for acquisition of a land on behalf of the assessee therein. The Assesing officer levied a penalty under section 271D of the Act for alleged violation of the provisions of section 269SS of the Act since the books of the assessee reflected the liability on account of the lands acquired on its behalf. On appeal, the CIT (A) affirmed the penalty. The order of the CIT was successfully impugned by the assesee before the ITAT. On appeal, this Court held as under: "While holding that the provisions of section 269SS of the Act were not attracted, the Tribunal has noticed that (i) in the instant case, the transaction was by an account payee cheque; (ii) no payment on account was made in cash either by the assessed or on its behalf; (iii) no loan was accepted by the assessee in cash, and (iv) the payment of

ITA Nos.7124 to 7129/Mum/2016 31 M/s Galaxy Premises Pvt. Ltd. Rs. 4.85 crores made by the assesee IL & FS, which holds more than 30 per cent of the paid-up capital of the assessee, by journal entry in the books of account of the assessed by crediting the account of IL & FS. Having regard to the aforenoted findings, which are essentially findings of fact, we are in complete agreement with the Tribunal that the provisions of section 269SS were not attracted on the facts of the case. Admittedly, neither the assessee nor IL & FS had made any payment in cash. The order of the Tribunal does not give rise to any question of law, much less a substantial question of law. We accordingly decline to entertain the appeal. Dismissed."

ITA Nos.7124 to 7129/Mum/2016 32 M/s Galaxy Premises Pvt. Ltd. assessment order, which is already extracted above paras, bears witness to the above findings. Further, to give effect to his findings in the assessment order, the AO wrote a letter to the Addl. CIT on 11.1.2012, intimating to him about the violation to the said provisions of the Act. On receipt of the said reference from the AO, Addl. CIT issued a show cause notice on 15.2.2012 calling for explanation of the assessee as to why the penalty u/s 271D should not be imposed in the case of the assessee. Eventually, Addl. CIT passed a penalty order u/s 271D of the Income Tax Act on 28.9.2012. Considering the fact that the assessment order is dated 5.12.2011 and as per the provisions of clause © to section 275(1) of the Act, 6 months from the end of the month in which the action was initiated expires on 30.6.2012. After considering the explanation of limitation u/s 275(2), Explanation 1 read with section 129 of the Act, extended limitation expires on 30.7.2012 against the above due dates, the penalty order passed by the Addl. CIT on 28.9.2012, which is barred by the limitation. Thus, the orders of the penalty of this kind have to be explained considering the provisions of clause (c) of section 275(1) of the Act. Further, it is the summary of the decision cited above that any case where AO made a reference in the assessment order, after discussing the same with the assessee during the regular assessment proceedings or made a referral to the Addl. CIT for imposition of the penalty. In our opinion, these preliminary acts constitute "action for the imposition of penalty". An action for imposition of penalty is always anterior in time to the "actual" imposition of penalty. In our opinion, the AO‟s discussion given in para 6 of the assessment order and AO‟s letter dated 6 to the Addl. CIT constitutes "action for imposition of penalty". Therefore, we are of the opinion, the assessee should succeed on the legal issue. Accordingly, ground raised by the assessee is allowed.

Provisions of section 273B of the Act - Reasonable Cause 23. Now, we shall take up the applicability of provisions of section 273B of the Act qua the reasonable cause to be proved by the assessee. The provisions of section 273B of the Act reads as under: "Section 273B. Notwithstanding anything contained in the provisions of [clause (b) of sub-section (1) of [section 271, section 271A, [section 271AA], section 271B, [section 271BA], [section 271BB,] section 271C, [section 271CA,] section 271D, section 271E, [section 271F, [section 271FA,] [section 271FB,] [section 271G,]] [section 271H,] clause (c) or clause (d) of sub-section (1) or sub-section (2) of section 272A, sub-section (1) of section 272AA] or [section 272B or] [sub-

ITA Nos.7124 to 7129/Mum/2016 33 M/s Galaxy Premises Pvt. Ltd. section (1) [or sub-section (1A)] of section 272BB or] [sub-section (1) of section 272BBB or] clause (b) of sub-section (1) or clause (b) or clause (c) of sub-section (2) of section 273, no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the said provisions if he proves that there was reasonable cause for the said failure.]"

ITA Nos.7124 to 7129/Mum/2016 34 M/s Galaxy Premises Pvt. Ltd. "9. The question as to whether loans / deposits can be repaid by debiting the accounts through journal entries has been considered by this Court in the assessee‟s own case in Income Tax Appeal No.5746 of 2010 decided on 12th June, 2012. Applying the ratio laid down therein we hold that receiving loans / deposits through journal entries would be in violation of section 269SS of the Act. However, as rightly contended by Mr. Pardiwala, Ld Senior Advocate appearing on behalf of the assessee, the transactions in question were undertaken not with a view to receive loans / deposits in contravention of section 269SSbut with a view to extinguish the mutual liability of paying / receiving the amounts by the assessee and its sister concern to the customers. In the absence of any material on record to suggest that the transactions in question were not reasonable or bona fide and in view of section 273B of the Act, we see no reason to interfere with the order of the Tribunal in deleting the penalty of Rs. 22.99 Crs." 26. From the above, it is evident that the Hon‟ble High Court has granted relief to the assessee on finding that there is no material to suggest that the transactions in question are not reasonable or bona fide. Of course, it is the finding of the Honble High court that the impugned journal entries in that case do not escape the rigors of the provisions of section 269SS/269T of the Act. The CIT (A) did not appreciate the „reasons‟ given by the assessee for receiving loans and advances through „journal entries‟ as „reasonable causes‟. It is the finding of Honble High court in the case of M/s Triumph International Ltd supra, that „the transactions in question were undertaken not with a view to receive loans / deposits in contravention of section 269SS but with a view to extinguish the mutual liability of paying / receiving the amounts by the assessee and its sister concern to the customers. In the absence of any material on record to suggest that the transactions in question were not reasonable or bona fide and in view of section 273B of the Act, we see no reason to interfere with the order of the Tribunal in deleting the penalty..‟ He ignored the above finding of the Court and confirmed the penalty levied by the Addl. CIT. Aggrieved with the above decision of the CIT (A), the assessee is in appeal before the Tribunal with the argument that the assessee‟s reasons constitutes a reasonable cause.

ITA Nos.7124 to 7129/Mum/2016 35 M/s Galaxy Premises Pvt. Ltd. 1 Alternate mode of raising funds; 2 Assignment of receivables; 3 Squaring up transactions; 4 Operational efficiencies/MIS purpose; 5 Consolidation of family member debts; 6 Correction of errors; and 7 Loans taken in case

27.1. All the transactions that involved the impugned journal entries fall in one of the above seven reasons and they are only for „business purposes‟ of the assessees‟ under consideration.

Classification of reasonable causes

ITA Nos.7124 to 7129/Mum/2016 36 M/s Galaxy Premises Pvt. Ltd. The Chart showing the details of groups of the transactions to which falls into each of the group are tabulated as under:

ITA Nos.7124 to 7129/Mum/2016 37 M/s Galaxy Premises Pvt. Ltd.

Sl No.1, 2, 3, 4, 5, 6 & 7 refer to the categories mentioned in the preceding table inserted in page 23 of the order relating to „Classification of Reasonable Causes‟.

a) "The seven categories of entries and a very brief explanation.

ITA Nos.7124 to 7129/Mum/2016 38 M/s Galaxy Premises Pvt. Ltd. b) These entries are with sister concerns and associates. The view in the penalty order that Durgeshwari is an independent concern is incorrect because penalty order itself starts with the sentence that "Assesee has taken from sister concerns". c) It has been proved before the Addl. CIT and CIT (A) that there is absolutely no cash involved and the source can be traced to A/c payee cheques only. Addl. CIT has failed to refute this but only in order to strengthen his case on flimsy ground he makes a presumptive assertion that these entries has been passed to camouflage the sources and to evade tax. d) There is no attempt either in assessment order or in order to doubt the source of the entries and to take any consequential action under relevant provisions of the Income Tax Act. So, appellant‟s on source of entries being A/c payee cheque is correct." 30. It is the submission of the assessee that the Hon‟ble High Court has laid down the broad principles for determining the „reasonable cause‟ within the meaning of section 273B of the Act. The judgment in the case of Triumph International (I) Ltd dated 12.6.2012 (this judgment is different from that of judgment of Triumph International (I) Ltd dated 17.8.2012) and it explains the guidelines for the expression "reasonable cause".

"23. The expression 'reasonable cause' used in Section 273B is not defined under the Act. Unlike the expression 'sufficient cause' used in Section 249(3), 253(5) and 260A(2A) of the Act, the legislature has used the expression 'reasonable cause' in Section 273B of the Act. A cause which is reasonable may not be a sufficient cause. Thus, the expression 'reasonable cause' would have wider connotation than the expression 'sufficient cause'. Therefore, the expression 'reasonable cause' in Section 273B for non-imposition of penalty under Section 271E would have to be construed liberally depending upon the facts of each case. 24. In the present case, the cause shown by the assessee for repayment of the loan/deposit otherwise than by account-payee

ITA Nos.7124 to 7129/Mum/2016 39 M/s Galaxy Premises Pvt. Ltd. cheque/bank draft was on account of the fact that the assessee was liable to receive amount towards the sale price of the shares sold by the assessee to the person from whom loan/deposit was received by the assessee. It would have been an empty formality to repay the loan/deposit amount by account-payee cheque/draft and receive back almost the same amount towards the sale price of the shares. Neither the genuineness of the receipt of loan/deposit nor the transaction of repayment of loan by way of adjustment through book entries carried out in the ordinary course of business has been doubted in the regular assessment. There is nothing on record to suggest that the amounts advanced by Investment Trust of India to the assessee represented the unaccounted money of the Investment Trust of India or the assessee. The fact that the assessee company belongs to the Ketan Parekh Group which is involved in the securities scam cannot be a ground for sustaining penalty imposed under Section 271E of the Act if reasonable cause is shown by the assessee for failing to comply with the provisions of Section 269T. It is not in dispute that settling the claims by making journal entries in the respective books is also one of the recognized modes of repaying loan/deposit. Therefore, in the facts of the present case, in our opinion, though the assessee has violated the provisions of Section 269T, the assessee has shown reasonable cause and, therefore, the decision of the Tribunal to delete the penalty imposed under Section 271E of the Act deserves acceptance."

ITA Nos.7124 to 7129/Mum/2016 40 M/s Galaxy Premises Pvt. Ltd. AO to suggest or demonstrate the same. In the language of the Honble High court, „neither the genuineness of the receipt of loan/deposit nor the transaction of repayment of loan by way of adjustment through book entries carried out in the ordinary course of business has been doubted in the regular assessment. Admittedly, the transactions by way of journal entries are aimed at the extinguishment of the mutual liabilities between the assessees and the sister concerns of the group and such reasons constitute a reasonable cause.

ITA Nos.7124 to 7129/Mum/2016 41 M/s Galaxy Premises Pvt. Ltd. the recognized modes of recording the loan/deposit. The commercial nature and occurrence of these transactions by way of journal entries is in the normal course of business operation of the group concerns. In this regard, there is no adverse finding by the AO in the regular assessment. AO has not made out in the assessment that any of the impugned transactions is aimed at non commercial reasons and outside the normal business operations. As such, the provisions of section 269SS and 269T dof the Act shall not be attracted where there is no involvement of the „money‟ as held by the Hon‟ble High Court of Delhi in the above cited cases, supra. Therefore, in the facts of the present case, in our opinion, though the assessee has violated the provisions of Section 269SS / 269T of the Act in respect of journal entries, the assessee has shown reasonable cause and, therefore, the penalty imposed under Section 271D/E of the Act are not sustainable. Regarding an amount of „money‟ said to have been paid in violation of the said provisions, the same needs to be deleted in view of our decision on the legal issue discussed in para 16 to 22 of the this order. Accordingly, the grounds raised in this regard are allowed.

ITA Nos.7124 to 7129/Mum/2016 42 M/s Galaxy Premises Pvt. Ltd. 37. In the result, all the 7 appeals of the assessees are allowed.”

2.4. It is noteworthy that the aforesaid order of the

Tribunal dated 27/06/2014 was carried in appeal by the

Revenue before Hon'ble jurisdictional High Court, wherein,

vide order dated 06/02/2018 in the case of CIT vs Ajitnath

Hi-Tech Builders Pvt. Ltd. (ITA No.178 of 2015) and CIT vs

Lodha Properties Development Pvt. Ltd. & Ors., the Hon'ble

High Court upheld the order of the Tribunal and held as

under:-

ITA Nos.7124 to 7129/Mum/2016 43 M/s Galaxy Premises Pvt. Ltd. case and in law, the Tribunal is justified in holding that the journal entries should enjoy equal immunity on par with account payee cheques and bank drafts ? 3. Regarding Question No.(i) (a) The common impugned order of the Tribunal arises from the orders passed by the Addl. Commissioner of Income Tax imposing penalty upon the respondents under Section 271D of the Act for breach of Section 269SS of the Act. This penalty was imposed inasmuch as during the previous year relevant to the subject assessment year, the respondents had accepted loans / deposits by way of passing journal entries in its books of accounts, in breach of Section 269SS of the Act. In terms Section 269SS of the Act prohibits a person from taking / accepting any loan / deposit or specified sum, otherwise by an account payee cheque or by an account payee bank draft or by use of electronic clearing system of a bank if the amount involved is in excess of Rs.20,000/-. This imposition of penalty under Section 271D of the Act, was upheld by a common 31St December, 2013 passed by the order dated Commissioner of Income Tax (Appeals). On further appeal, the impugned order dated 27t1 June, 2014 of the Tribunal, inter a/ia held that penalty under Section 271D of the Act is not imposable in view of Section 273B of the Act. This for the reason that there was a reasonable cause for the failure to comply with Section 269SS of the Act. (b) On merits of the issue, the parties before us are agreed that the Tribunal was correct in holding that receipt of any advance / loan by way of journal entries is in breach of Section 269SS of the Act as the decision of this Court in Commissioner of Income Tax Vs. Triumph International Finance (I) Ltd. 345 ITR 270 is binding upon it. However, the Revenue's grievance is with the impugned order dated 27 tJune, 2014 of the Tribunal further holding no penalty under Section 271D of the Act is imposable in view of Section 273B of the Act in the present facts. This is so as the Tribunal holds that the failure to comply with Section 269SS of the Act was on account of reasonable cause on the part of the respondents. This finding of reasonable cause was on the application of parameters laid down by this Court in for not complying with the provisions of Section 269SS of the Act. (c) Mr. Mohanty, the learned Counsel for the Revenue seeks to challenge the impugned order of

ITA Nos.7124 to 7129/Mum/2016 44 M/s Galaxy Premises Pvt. Ltd. the Tribunal on the ground that Section 273B of the Act will have no application as the test of reasonable cause is not satisfied :in the present facts for the following reasons :- (i) the decision of this Court in Triumph International Finance (supra) will have no application as that was of the case of only one transaction while in this case, there are numerous transactions reflected through the passing of journal entries; (ii) the reasons set out for taking advances / deposits by way of journal entry would not satisfy the test of reasonable cause; and (iii) the non-satisfaction of showing reasonable cause as required under Section 273B of the Act gives rise to a question of law as it is a legal inference to be drawn from primary facts as held by the Apex Court in Premier Breweries Ltd. Vs. Commissioner of Income Tax, 372 ITR 180. Thus, it is submitted this question requires admission as it gives rise to a substantial question of law; We find that the impugned order of the (d) Tribunal has on application of the test laid down for establishment of reasonable cause, for breach of Section 269SS of the Act by this Court in Triumph International Finance (supra) found that there is a reasonable cause in the present facts to have made journal entries reflecting deposits. The Tribunal while relying upon the order of this Court in Triumph International Finance (supra) has held that in the present facts, neither the genuineness of receipt of loans / deposits by way of an adjustment through journal entries carried out in the ordinary course of business has been doubted in the regular assessment proceedings. It held in the present facts the transaction by way of journal entries was undisputedly done to raise funds from sister concerns, to adjust or transfer balances to consolidate debts, to correct clerical errors etc. Further; the Tribunal records that as observed by this Court in Triumph International Finance (supra) that journal entries constituted a

ITA Nos.7124 to 7129/Mum/2016 45 M/s Galaxy Premises Pvt. Ltd. recognized modes of recording of transactions and in the absence of any adverse finding by the authorities that the journal entries were made with a view to achieve purposes out side the normal business operations or there was any involvement of money, then, in these facts there was a reasonable cause for not complying with Section 2695S of the Act. (e) Mr. Mohanty's submission that the test laid down in Triumph International Finance (supra) will have no application in the present facts in view of the large number of entries in this case as compared to only one entry in the case before this Court. The test of reasonable cause can not, in the present facts be determined on the basis of the number of entries. If there was a reasonable cause for making the journal entries, then, the number of entries made, will not make any difference. Besides, on facts, the Tribunal was satisfied with the reasons given by the Assessee for reasonable cause and this finding is not shown to be perverse. Finally, the issue of there being a reasonable cause or not is an issue of fact. No inference of law and / or issue of interpretation is to be made. The decision relied upon by the Revenue in case of Premier Breweries Ltd. (supra) concerned itself with the issue of a claim for deduction under Section 37 of the Act on the basis of the Agreements entered into between the parties. The inference of law in that case was whether on the facts, it could be inferred that the claim for deduction is in respect of expenditure incurred wholly and exclusively for the purposes of the business. Thus, it would involve a question of interpretation of the agreements etc. from which an inference is to be drawn. Further, it also involves application of principles of law to the facts for the purposes of deductions and, therefore, it would lead to a question of law. Therefore, the Court held in the facts of that case that a question of law does arise. (f) In this case, the issue of reasonable cause is an inference of fact from facts and, therefore, a question of fact. The Supreme Court decision in Sree Meenakshi Mills Ltd. Vs. Commissioner of Income Tax, 31 ITR 28 had laid down the tests to determine a question of law and / or

ITA Nos.7124 to 7129/Mum/2016 46 M/s Galaxy Premises Pvt. Ltd. fact. In the above context, the Court observed that when the finding is one of fact, the fact that it itself is an inference from other basic facts, will not alter its character as one of fact. Therefore, the issue of there being reasonable cause or not, is a question of fact and unless it is shown to be perverse, we would normally not interfere. (g) In the above circumstances, the view taken by the Tribunal on the facts before it, is a possible view and does not give rise to any substantial question of law. (h) In any event, as rightly pointed out by Mr. Sridharan, learned Senior Counsel for the respondents assesses, the order of this Court in Triumph International Finance (supra) was rendered on 12' June, 2012. This, was in an appeal filed by the Revenue from the order of the Tribunal dated 29th January, 2008, which had held that deposits / loans received through journal entries do not fall with the mischief of Section 269SS of the Act, so as to invite penalty under Section 271D of the Act. This, the Tribunal did by following its earlier orders in the case of VN. Parekh Ltd. and Ketan Parelth as indicated in the order ofthis Court in Triumph International Finance (supra). Our attention was also invited to numerous reported decisions of the Tribunal in the cases of Sunflower Builders Vs. Dy.CIT, 1997 (61) lTD (Pune) 227, Asst.CIT Vs. Ruchika Chemicals & Investment (P) Ltd. 2004 (88) TTJ (Delhi)85 and Asst.CIT Vs. Lala Murari Lal & Sons, 2004(2) SOT (Luck) 543 wherein it has been held journal entries in the book of accounts indicating deposit / loans will not fall foul of Section 269SS of the Act. Besides, the Delhi High Court in Commissioner of Income Tax Vs. Noida Toll Bridge Co. Ltd. 262 ITR 260 inter alia held that payment of Rs.4.85 crores made by the assesses by a journal entry in its books of account by crediting the account of ILFS, would not fall foul of Section 2695S of the Act. This particularly in the absence of any payment being made in cash. (i) In the present facts, the period during which the journal entries were made by the respondents was in the previous year relevant to the Assessment Year 2009-10 i.e. Financial Year 2008-09. At that time, the decisions of the Tribunal in the cases of Triumph International (Supra) and decision of VH. Parekh (P) Ltd., Ketan V Parekh, Sunflower Builders (supra), Ruchika Chemicals (supra), Lala Murari Lal (supra) and the decision of the Delhi High Court in Noida Toll Bridge Co.

ITA Nos.7124 to 7129/Mum/2016 47 M/s Galaxy Premises Pvt. Ltd. Ltd. (supra) were holding the field. Thus, not in breach of Section 269SS of the Act. In the above view, while agreeing with the submission of Mr. Mohanty, learned Counsel for the appellant that the decision of this Court in Triumph International Finance (supra) has only clarified / stated the position as always existing in law, the receiving of deposits / loans through journal entries would certainly be hit by Section 2695S of the Act. Nevertheless, prior to the decision of this Court in Triumph International Finance (supra), there was reasonable cause for respondents to receive deposit / loan through journal entries. This non-compliance with Section 269SS of the Act would certainly be a reasonable cause under Section 273B of the Act for non- imposition of penalty under Section 271D of the Act. (j) In the above circumstances, the view taken by the Tribunal in the impugned order holding that no penalty can be imposed upon the respondents as there was a reasonable cause in terms of Section 271B of the Act for having received loans / deposits through journal entries is at the very least is a possible view in the facts of the case. (k) Therefore, the question as posed does not give rise to any substantial question of law. Thus, not entertained. Regarding question nos. (ii). (iii) and (iv) :- 4. (a) In view of our answer to question no.(i), question nos. (ii), (iii) and (iv) in the present facts have been rendered academic. Thus, we are not dealing with them. (b) In the above view, question (ii), (iii) and (iv) do not give rise to any substantial question of law in the present facts. Thus, not entertained. 5. Accordingly, all six appeals are dismissed. No order as to costs.” 2.5. In another case of Vimal Enterprises vs ACIT

(ITA No.6930/Mum/2016), order dated 14/06/2017, the

Mumbai Bench of the Tribunal on identical issue held that

ITA Nos.7124 to 7129/Mum/2016 48 M/s Galaxy Premises Pvt. Ltd. in view of provision of section 273B and penalty under

section 271D for contravention of section 269SS cannot be

held to be justified and the Ld. Assessing Officer was

directed to delete the penalty. The relevant portion of the

aforesaid order is reproduced hereunder:-

“This appeal filed by the assessee is directed against order of the CIT(A)-42, Mumbai dated 19.08.2016 and it pertains to the assessment year 2012-13. 2. The brief facts of the case are that the assessee is a firm engaged in the business of manufacture of printed polythene bags, filed its return of income for assessment year 2012-13 on 14.09.2012 declaring total income of Rs.1,38,060/-. The assessment was completed u/s. 143(3) on 27.03.2015, assessing the total income of the assessee at Rs.1,38,060/-. However, the A.O while completing the assessment, observed that the assessee has accepted loans in excess of prescribed limits otherwise then by way of account pay cheque or drafts, thereby violated the provision of section 269SS of the Act, which attracts penalty u/s. 271D of the Income Tax Act of 1961. 3. The Joint Commissioner of the Income Tax- 31(3), Mumbai, based on the observations of the assessing officer, initiated penalty proceedings u/s. 271D of the I.T. Act, 1961 and accordingly, issued a show cause notice dated 01.09.2015 which was duly served on the assessee, requiring it to show cause as to why penalty shall not be levied u/s.271D of the Act, for contravention of provision of Section 269SS of the I.T. Act, 1961. 4. In response to show cause notice, the assessee has filed its reply vide letter dated 30.08.2015 and submitted that there is no contravention of Section 296SS, as it has

ITA Nos.7124 to 7129/Mum/2016 49 M/s Galaxy Premises Pvt. Ltd. accepted loans by way of book adjustment, by passing necessary journal entries in the books accounts for transfer of existing unsecured loans borrowed by its sister concern M/s. Atlanta International. The assessee further submitted that the reason for transfer of loans appearing in the books of M/s. Atlanta International is that, its bankers were insisting for additional capital contribution from the partners/their friends and relatives for the purpose of availing financial facilities, therefore it has transferred unsecured loans taken in the name of its sister concerns to its books of accounts on the bonafide belief that accepting loan by book adjustment, through journal entries would not attract the provision of Section 269SS of the I.T. Act, 1961. 5. The A.O after considering the explanation of the assessee and also analyses of the provision of Section 269SS and 271D of the Act, observed that the provision of Section 271D doesn’t mentioned anything about the loans being taken in cash. The provision is on accepting any loan or deposit otherwise then by an account payee cheque or account payee bank draft (or use of electronic clearance system through the bank draft). From the reading of provision of Section 271D, it is clear that if a loan or deposit is accepted otherwise then by way of account payee cheque or bank draft, then it is in contravention of provisions of Section 269SS, which attracts penalty u/s. 271D of the Act. The A.O further observed that though Section 273B excludes certain failures referred to in the provision of Section 271D, to get immunity from penalty, the onus is on the assessee to prove that there was a reasonable cause for the said failure. The assessee, neither before the A.O nor during penalty proceedings failed to prove reasons for not accepting the loans by way of modes referred to in Section 269SS of the Act. Therefore, opined that the assessee has violated the provision of Section 269SS, which attracts penalty u/s. 271D of the Act. Accordingly, levied penalty of

ITA Nos.7124 to 7129/Mum/2016 50 M/s Galaxy Premises Pvt. Ltd. Rs.21,51,464/-, equal to the amount of loan/deposit taken/accepted. 6. Aggrieved by the penalty order, the assessee preferred an appeal before the CIT(A). Before the CIT(A), the assessee reiterated the submissions made before the A.O. The assessee further submitted that there is no violation of provisions of Section 269SS of the Act, as it has accepted loans by way of book adjustment by passing necessary journal entries in the books of accounts for the existing loans appeared in the books of accounts of its sister concerns. The reasons for transferring existing loans from the books of its sister concerns is that its bankers are instating for additional capital contribution from the partners or their friends & associates for the purpose of extending credit facilities. The assessee under bonafide belief, that acceptance of loans by way of book adjustment, would not attract provision of Section 269SS, has transferred existing loans from its sister concerns to its books accounts, therefore it cannot be considered as acceptance of loans other than by way of account payee cheque or bank drafts. In support of its arguments, relied upon the decision of Hon’ble Bombay High Court, in the case CIT vs. Triumph International Finance (India) Ltd. (2012) 245 ITR 270 (Bom). 7. The CIT(A), after considering the relevant submissions of the assessee, held that accepting loans by way of book adjustment through journal entries is violation of Section 269SS and the penalty u/s. 271D of the Act, was correctly imposed. With these observations, upheld penalty levied by the A.O and dismissed appeal filed by the assessee. Aggrieved by the CIT(A) order, the assessee is in appeal before us. 8. The Ld. A.R for the assessee, submitted that the Ld. CIT(A) without giving proper/sufficient opportunity and disregarding the bonafide and genuine explanation of the assessee erred in holding that accepting loan by way of book transaction through journal entry is a violation of Section 269SS, which attracts penalty u/s.271D of the Act. The A.R further submitted that the

ITA Nos.7124 to 7129/Mum/2016 51 M/s Galaxy Premises Pvt. Ltd. assessee was under bonafide belief that the alleged transaction was not within the purview of the provision of Section 269SS of the Act. It is further argued the assessee has accepted loans by book adjustment and transferred existing loans appeared in the books accounts of its sister concern M/s. Atlanta International on the bonafide belief that accepting loans by book adjustment would not attract penalty provisions of Section 271D. It is further submitted that it has accepted loans, as its bankers insisting for additional contribution from the partners and their friends for the purpose of extending credit facilities. The A.R further submitted that the A.O erred in levying penalty without their being any finding in the assessment order or the penalty order that acceptance of loan was not bonafide transaction and that the entries were made with a view to evade tax. The assessee has accepted loans under bonafide belief that these transactions are not hit by the provisions of Section 269SS and also fact that there is reasonable cause for not accepting the loans by way of cheques or bank drafts and therefore, the AO was completely erred in levying penalty, brushing aside explanation filed by the assessee. In support of his arguments, relied upon the following judgments. i) ITO vs. Ramalingeswara Commercial Complex and ANR. (2016) 47 CCH 0052 Vishakhapatnam Tribunal ii) ACIT vs. Lala Murari Lal and Sons (2004) 2 SIT 543 (Luck) iii) CIT vs. Natvarlal Purshottamdas Parekh (203 ITR 5) iv) CIT vs. Noida Toll Bridge Co. Limited (2562 ITR 260) v) Bombay Conductors & Electricals Limited vs. OCIT 56 TT J(Ahd) 580 vi) CIT vs. Govind Kumar 119 Taxman 110 (Raj) vii) Sunflower Builders (P) Ltd. vs. OCIT 61 ITO 227 (Pune) viii) ITO vs. Arnar Nath Shivraj (HUF);1 SOT 346 (Agra)

ITA Nos.7124 to 7129/Mum/2016 52 M/s Galaxy Premises Pvt. Ltd. ix) ACIT vs. Gujarat Ambuja Proteins Ltd. 3 SOT 811 (Ahd.) 9. On the other hand, the Ld. DR strongly supported order of the CIT(A). The D.R further submitted that the provisions of section 271D would apply, if assessee accepts loans or deposits in contravention of the provision of Section 269SS of the Act. In this case, the assessee has accepted unsecured loans otherwise then by way of account payee cheque or bank draft, in contravention of Section 269SS of the Act, and hence, the A.O was rightly invoked the provision of Section 271D of the Act. 10. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. The A.O levied penalty u/s.271D of the Act, for contravention of provision of Section 269SS of the Act. According to the A.O, the assessee accepted unsecured loans otherwise then by way of account payee cheque or bank drafts in contravention of provisions of Section 269SS of the Act. It is the contention of the assessee that there is no contravention of provisions of Section 269SS of the Act, as it has accepted loans by way of book adjustments through journal entries to transfer existing loans appeared in the books of its sister concerns. The assessee further contended that the reasons for accepting loans by way of book adjustment is that its bankers insisting for additional contribution from its partners or from their friends and relatives for the purpose of extending credit facility. The assessee has accepted loans under bonafide belief that acceptance of loans by book adjustments would not attract provision of section 269SS and also there was a business exigency in accepting loans which come under reasonable cause as defined u/s. 273B of the Act. 11. The provision of 271D of the Act, provides for levy of penalty, for contravention of Section 269SS of the Act. Section 269SS of the Act, prohibits acceptance of loans other than by way of account payee cheque or demand draft. As per

ITA Nos.7124 to 7129/Mum/2016 53 M/s Galaxy Premises Pvt. Ltd. the provision of Section 271D, if a person takes or accepts any loan or deposits in excess of specified some in contravention of the provision of section 269SS, he shall be liable to pay by way of penalty, a sum equal amount of the loan or deposit so taken or accepted. Therefore, as per the provision of section 271D r.w.s. 269SS of the Act, if a person accepts loans in excess of specified limit otherwise then by way of an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account, then such person is liable for penalty of equal amount of loan or deposit so taken or accepted u/s. 271D of the Act. In this case, no doubt the assessee has accepted loans in excess of specified limits, otherwise then by way of account payee cheque or account payee bank draft. Therefore, we are of the considered view that the assessee has accepted loans in contravention of the provision of Section 269SS of the Act. 12. Having said, let us examine whether any reasonable cause for not accepting loans by way of account payee cheque or demand draft. The assessee claims that it has accepted loans by book adjustment by passing journal entries in the books of accounts for transfer of existing loans appeared in the books of accounts of its sister concerns. The assessee further claims that these loans were accepted by its sister concern, through proper banking channel. It was further contended that it has transferred existing loans of its sister concerns, because its bankers were insisting for bringing in more capital contribution in the form of own capital or loans and advances from partners or their friends and relative for the purpose extending credit facilities. The assessee claims that these loans are genuine transaction which were accepted by way of cheques by its sister concern. The assessee further claims that it was under the bonafide belief that, acceptance of loans or deposit by book adjustment would not attract the provision of Sections 269SS of the Act. There is a reasonable cause, for failure to comply

ITA Nos.7124 to 7129/Mum/2016 54 M/s Galaxy Premises Pvt. Ltd. with the provision of Section 269SS of the Act, therefore penalty cannot be levied u/s. 271D of the Act. 13. Having heard both the sides and considered material on record, we find that the assessee has accepted loans by way of journal entries. The assessee has transferred loans standing in the name of its sister concern to its books of accounts for the purpose of enhancing its own funds as per the requirement of its bankers for the purpose availing credit facilities. The assessee has filed a paper book containing details of loan ledgers of parties appeared in the books of account of M/s. Atlanta International and also ledger accounts of loan creditors in the books of accounts. On perusal of details field by the assessee, we find that these loans have been transferred by book adjustment by way journal entries. We further noticed that the assessee has paid interest on these loans after duly deducting applicable TDS. We further observed that, it’s not a case of A.O that these loans are not genuine transactions. The AO neither doubted genuineness of the loan nor these are not a bonafide transaction or that the entries were made with a view to evade tax. In the absence of any finding as to genuineness of the transactions or the loans were accepted to evade taxes, penalty cannot be levied u/s. 271D of the Act, merely there is violation of Section 269SS of the Act. No doubt, the assessee has accepted loans in excess of specified amount, otherwise then by an account payee cheque or account payee bank draft, which violates the provision of Section 269SS of the Act. The reasons given by the assessee for accepting loans other than by way of account payee cheque or bank draft in contravention of Section 269SS of the Act, appears to be reasonable and comes under reasonable cause as provided u/s.273B of the Act. The provision of Section 273B provides for immunity from levy of penalty, if such person proves that there was a reasonable cause for the failure referred to in the said provision of the Act. In this case, on perusal facts available on records,

ITA Nos.7124 to 7129/Mum/2016 55 M/s Galaxy Premises Pvt. Ltd. we find that the reasons given by the assessee for accepting loans by way of book of adjustment comes under the reasonable cause as provided u/s. 273B and hence, penalty cannot be levied u/s. 271D of the Act, for contravention of provision of Section 269SS of the Act. 14. Coming to the case laws relied upon by the assessee, as well as the CIT(A). The assessee has relied upon the decision of Hon’ble High Court of Bombay, in the case of CIT vs Triumph International Finance(India) Ltd. (2012) 245 ITR 270. The Ld. CIT(A) also relied upon the decision of Hon’ble Bombay High Court, in the case mentioned above to confirm the penalty levied by the A.O. We have gone through the case law relied upon by both the parties. On perusal of the decision of Hon’ble High Court, we find that their lordships in the first phase, held that taking of loans/ repaying loans through journal entries is a violation of the provision of section 269SS of the Act. However, in the second phase, the Hon’ble Court observed that in the absence of any finding in the assessment order or in the penalty order to the effect that the repayment of loan or deposit was not a bonafide transaction and was made with a view to evade tax, the cause shown by the assessee was a reasonable cause and in view of Section 273B of the Act, no penalty u/s. 271E could be imposed for contravention of provisions of Section 269T. The relevant portion of the order is extracted below: “Held, (i) that the Tribunal was not justified in holding that repayment of loan or deposit through journal entries did not violate the provisions of section 269T of the Act. ii) That it would have been an empty formality to repay the loan or deposit amount by account- payee cheque or draft and receive back almost the same amount towards the sale price of the shares. Neither the genuineness of the receipt of loan or deposit nor the transaction of repayment of loan by way of adjustment through book entries carried out in the ordinary course of business had been doubted in the regular

ITA Nos.7124 to 7129/Mum/2016 56 M/s Galaxy Premises Pvt. Ltd. assessment. There was nothing on record to suggest that the amounts advanced by I to the assessee represented the unaccounted money of I or the assessee. The fact that the assessee- company belonged to a group involved in the securities scam could not be a ground for sustaining penalty imposed under section 271E of the Act if reasonable cause was shown by the assessee for failing to comply with the provision of section 269T. Settling claims by making journals entries in the respective books is also one of the recognized modes of repaying loan or deposits. Therefore, on the facts, in the absence of any finding recorded in the assessment order of in the penalty order to the effect that the repayment of loan or deposit was not a bona fide transaction and was made with a view to evade tax, the cause shown by the assessee was reasonable cause and in view of the section 273B of the Act, no penalty under section 271E could be imposed for contravening the provisions of section 269T of the Act.” 15. The Ld. CIT(A) has considered part of the judgment and ignored other part of the judgment to confirm penalty levied u/s. 271D of the Act. No doubt, we are of the considered view that penalty u/s. 271D is leviable for accepting of loan or deposit in contravention of Section 269SS of the Act. However, the genuine transactions and bonafide explanations cannot take away the right of the assessee of immunity provided u/s. 271D of the Act. Therefore, we are of the considered view that the explanations offered by the assessee appears to be coming within the purview of the provisions of Section 273B of the Act, and hence, penalty cannot be levied u/s. 271D, for contravention of provisions of Section 269SS of the Act. Therefore, we direct the AO to delete penalty levied u/s 271D of the Act. 16. In the result, the appeal filed by the assessee is allowed.”

ITA Nos.7124 to 7129/Mum/2016 57 M/s Galaxy Premises Pvt. Ltd. 2.6. The Hon'ble Delhi High Court vide order dated

28/01/2013 in the case of Noida Toll Bridge 262 ITR

260(Del.) on identical issue observed held as under:-

ITA Nos.7124 to 7129/Mum/2016 58 M/s Galaxy Premises Pvt. Ltd. holding that the provisions of section 269SS of the Act were not attracted, the Tribunal has noticed that: (i) in the instant case, the transaction was by an account payee cheque, (ii) no payment on account was made in cash either by the assessee or on its behalf, (iii) no loan was accepted by the assessee in cash, and (iv) the payment of Rs. 4.85 crores made by the assessee through IL & FS, which holds more than 30 per cent of the paid-up capital of the assessee, by journal entry in the books of account of the assessee by crediting the account of IL & FS. 5. Having regard to the aforenoted findings, which are essentially findings of fact, we are in complete agreement with the Tribunal that the provisions of section 269SS were not attracted on the facts of the case. Admittedly, neither the assessee nor IL & FS had made any payment in cash. The order of the Tribunal does not give rise to any question of law, much less a substantial question of law. 6. We accordingly decline to entertain the appeal. Dismissed.” 2.7. In the light of the aforesaid decisions, now we

shall the facts, in brief, for Assessment Year 2007-08 (ITA

No.7124/Mum/2016), the assessment was completed

under section 143(3) r.w.s. 147 of the Act at a total income

of Rs.1,31,340/- on 30/03/2015. In the assessment order,

it has been observed by the Ld. Assessing Officer that the

assessee has violated the provisions of section 269SS/269T

by not accepting/not repaying the loans through account

payee cheque/bank draft and therefore the Ld. Addl. CIT

levied penalty under section 271D with respect to total

credit entries amounting to Rs.59,38,157/- arising in the

books with M/s Lodha Development Pvt. Ltd. by way of

journal entries, during the Financial Year 2006-07

ITA Nos.7124 to 7129/Mum/2016 59 M/s Galaxy Premises Pvt. Ltd. (Assessment Year 2007-08). It is noted that the Ld. Addl.

CIT following the decision from Hon'ble jurisdictional High

Court in the case of Triumph International Finance (I) Ltd.

((supra)) (also relied upon by the Ld. CIT-DR) held that

there is a contravention of the provisions of section 269SS

of the Act and further the assessee could not prove a

reasonable cause for contravention of the provision. He

observed that since the disclosure was made by the group

companies before the income settlement commission,

Mumbai, following search in Lodha Group of Cases on

10/01/2011, it could not be ruled out that the entities

through such repayment/acceptance by way of journal

entries are involved in transactions for the purpose of tax

evasion. Whereas, the stand of the assessee is that the

journal entries passed for transaction assigning debts and

liabilities among sister concern and reimbursement of

expenses do not constitute acceptance of loan or deposit of

money as per the provisions of section 269SS of the Act.

The stand of the Revenue is that the assessee company has

also paid interest on such loans and since the transactions

are more than the amount of Rs.20,000/- and not through

ITA Nos.7124 to 7129/Mum/2016 60 M/s Galaxy Premises Pvt. Ltd. account payee cheque/bank draft, there is violation of the

provisions of section 269SS/269T of the Act. However, if

the cases relied upon by the Ld. CIT-DR as well as by the

Ld. Counsel for the assessee are kept in juxtaposition and

analyzed, we find that the Hon'ble High Court in a later

order dated 06/02/2018 in the case of CIT vs Ajitnath Hi-

Tech Builders Pvt. Ltd. & Ors. ((supra)) duly discussed the

decisions in the case of CIT vs Triumph International

Finance India Ltd., relied upon by the Ld. CIT-DR along

with the decision from Hon'ble Apex Court in Premier

Breweries Pvt. Ltd. vs CIT 372 ITR 180, Meenakshi Mills

Ltd. vs CIT 31 ITR 28, Noida Toll Bridge Company Ltd. (262

ITR 260) along with the non-compliance of section 269SS,

meaning of reasonable cause under section 273B and

consequent penalty under section 271D and thereafter

upheld the order of the Tribunal and dismissed the appeals

of the Revenue. Identically, the Mumbai Bench of the

Tribunal in the case of Vimal Enterprises vs JCIT ((supra)),

wherein, one of us (Ld. AM) is signatory to the order

allowed the appeal of the assessee. No contrary facts were

brought to our notice by the Revenue contradicting the

ITA Nos.7124 to 7129/Mum/2016 61 M/s Galaxy Premises Pvt. Ltd. observation made in the impugned orders, therefore,

respectfully following the aforesaid decisions from Hon'ble

Apex Court, Hon'ble High Courts, the decision of the Co-

ordinate bench and considering the factual matrix, we find

no infirmity in the conclusion drawn by the Ld. First

Appellate Authority, resultantly, the appeals of the Revenue

are dismissed.

Finally, the appeals of the Revenue are dismissed.

This Order was pronounced in the open court in the

presence of ld. representatives from both sides at the

conclusion of the hearing on 01/05/2018.

Sd/- Sd/- (G. Manjunatha) (Joginder Singh) लेखा सद�य / ACCOUNTANT MEMBER �या�यक सद�य / JUDICIAL MEMBER मुंबई Mumbai; �दनांक Dated : 13/07/2018 f{x~{tÜ? P.S/.�न.स.,

आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to :

ITA Nos.7124 to 7129/Mum/2016 62 M/s Galaxy Premises Pvt. Ltd. 6. गाड� फाईल / Guard file.

आदेशानुसार/ BY ORDER, स�या�पत ��त //True Copy//

उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील�य अ�धकरण, मुंबई / ITAT, Mumbai